Monday, March 27, 2006

The story below is exciting for two reasons: (1) 3D is finally starting take off as a viable medium and (2) movie theatres are starting to adapt their identity to survive the modern world.

The 3D thing is a little bit old news: James Cameron is already in production with his 3D animé Battle Angel (slated for release in 2009) and George Lucas has plans to re-release his two trilogies in 3D starting next year at the rate of one per year. Still, these directors are powerful players and they're leading the charge to establish 3D in the market—that's phase 1 of the takeover. Phase 2 happens when movie theatres step on the bandwagon, which is now happening. (Phase 3 is when the public embraces the new technology. Um, duh.)

As for (2), I've seen movie theatres pitch themselves as conference halls for big corporations and that's a clever way to make up for income lost to home theatre systems, but spotting a niche like 3D which the home consumer can't do and exploiting it? Genius! In fact, no one has ever gone to the cinemaplex to watch sports live before so this could quite possibly be the wave of the future.

Movie theater operators hope to be screening live 3D sports events by 2007 in a bid to lure sports fans away from their home theater systems and bolster sagging mid-week ticket sales.

Ticket sales at theater chains dropped 9 percent in 2005 from what analysts said was a combination of lackluster films, competition from other forms of entertainment such as video games, and the spread of large-screen, high-definition televisions and digital video recorders.

But while worldwide tickets sales are forecast to grow 12 percent over the next five years, exhibitors want to use new digital projection technology to change the way consumers think about movie theaters.

"We want to transition our theaters from being traditional movie theaters to being community entertainment destinations, and what better way to do this than sports?" said Shari Redstone, president of the National Amusements theater chain.

In 2004, during Boston Red Sox baseball fever—the year they won the World Series for the first time since 1918—National Amusements, the controlling shareholder in Viacom, began screening high-definition broadcasts of Red Sox games in its Showcase Cinemas in several New England cities on weekday nights.

The cinemas brought in vendors to stroll the aisles with hot dogs, peanuts and beer, sold team gear in the lobbies and encouraged fans to loosen up as they would in the ball park.

"We are not just putting the game up on the big screen but making the experience like being in Fenway Park," Redstone, a Red Sox fan, said. "The experience is more important, really, than what you are showing."

Other chains are looking to much-improved digital three-dimensional projection for an experience theatergoers can't get at home.

But while the projection has greatly advanced from the early 3D days, special glasses must still be worn to achieve the full effect.

Michael Lewis, chairman of privately held REAL D, which created 3D prints for the Disney's "Chicken Little," said 3D technology has tested successfully on National Football League games, but unwinding who owns the rights to screen games in theaters may be tricky.

"We think the concerts will be the first because they are easiest to do," Lewis said. "Sometime in 2007, our goal is to get live sports programming to theaters. Some of the (sports) rights holders see it as cannibalizing opportunities in other venues that they paid a lot of money for."

Brave new worldThree dimensional filming is achieved by using two digital cameras set apart the same distance as human eyes.

Lewis would not divulge which distributors Real D is working with on 3D sports broadcasts.

Peter Brown, chief executive of AMC Theatres, owned by privately held AMC Entertainment, said exhibitors are in the early stages of trying to drive more live content into their venues.

"It's a bit of a brave new world," Brown said last week at the ShoWest convention in Las Vegas. "The folks that control those rights or owners have to sort that out. (The contracts) weren't created with that notion in mind."

National Amusements had no problem securing rights to screen games because the Red Sox organization controls the New England Sports Network that broadcasts the team's games in the region—a lucky break, Redstone said.

"I have talked to some of the other (Viacom) entities about getting some more programming ... but it is extremely difficult to get through the rights issues," Redstone said.

Nor is it clear whether in-theater games would feature commercials or function more like pay per view.

National CineMedia, a consortium of Regal Entertainment Group, AMC and Cinemark theaters, has been working on ideas and relationships with TV networks and cable programmers, NCM Chief Executive Kurt Hall said.

National CineMedia has broadcast the NASCAR Daytona 500, Major League Soccer and part of the Tour de France in some of its theaters in past years, but wants to expand into regular sports and concert programming, especially during the weekday attendance lull.

"The intent is to cross-market the theater event and network TV programming and even start including the theater audiences in the TV ratings calculations," Hall said.